Posts By: Sam Bowman

As an amateur chef I have become increasingly interested in the government’s guidelines and regulations around food. For something so central to our lives, the advice and rules the government makes to do with what we eat are usually overlooked. Two developments this week suggest that this is a mistake.

I have previously argued that government regulation is often bad because, if it turns out to be bad regulation, it imposes a single error across an entire group of people or firms. That view may explain the financial crisis, where banks were required to hold lots of mortgage debt by regulators who thought they were forcing banks to be sensible.

Now, it looks as if it might also apply to diet guidelines. This week a new paper has been published that argues quite convincingly that, not only does modern evidence show that government guidelines to reduce dietary fat intake were a bad idea, they were even against the bulk of the evidence available at the time.

Today, it’s being reported that the US will stop advising people to avoid dietary cholesterol, because of a change in nutritionists’ view of how our diet affects our bodily cholesterol levels.

The Verge says that ‘The DGAC is more concerned about the chronic under-consumption of good nutrients, noting that Vitamin D, Vitamin E, potassium, calcium, and fiber are under-consumed across the entire US population.’ Interestingly, high-cholesterol foods like eggs, offal and seafood are very high in some of those vitamins.

It’s tempting to suggest a connection there – that vitamin deficiencies may be a direct cause of misguided government diet advice. And this may be the case. But, having looked around and spoken to the British Nutrition Foundation, I can’t find any work by either the government or independent academics on how much impact these guidelines have on what we eat, let alone on our health. (The exception is the five-a-day campaign, which has been fairly successful.)

If it turns out that diet guidelines have been wrong on things like fat and cholesterol, and maybe things like salt as well, what are the costs? I see there being two potential downsides to bad advice. The first is that the advice is actually dead wrong and drives people to eat in ways that ends up being worse for their health. Perhaps this is true of the cholesterol advice.

The second, which is more ambiguous, is the welfare cost. We eat not just for sustenance but because it gives us pleasure – a steak done well is much better for me than a well-done steak, because, even though the nutritional content is basically the same, it makes me happier. If government guidelines have been mistakenly putting people off eating foods they enjoy then they have been costly in welfare terms even if the health impact is not significant.

Of course people may need to get advice from somewhere, and I don’t see any reason to believe that government advice is worse than, say, the stuff you get in the Femail section of the Mail Online website. But if government diet regulations are still likely to be mistaken, and they influence people much more than any single bit of diet advice from an independent source, then they may end up holding back a process of private trial and error that would give us better information about what’s good to eat over time.

The latest issue of Econ Journal Watch discusses the correlation between support for economic regulation and welfare state redistribution among economists. Why, Daniel Klein asks in the issue’s opening chapter, is an economist who supports a lot of economic regulation so likely to support a lot of income redistribution as well?

A good question. He suggests that economists are motivated at a basic level by their feelings about ‘governmentalization’ – a general preference for or against using the government to solve problems that face society.

But like Andreas Bergh, another contributor, I am not convinced that at least one other configuration is so unlikely. Bergh argues that a ‘Hayekian welfare state’ is possible and may be more attractive than Klein suggests. I agree.

Probably the strongest general argument against regulation is given by Hayek, who argues that in a complex world our actions often have unexpected consequences. A ‘spontaneous order’ is a non-random system that has come about from individually-chosen actions, not from the design of a central planner. A language that does not have a central designing body might be an example, as might a free market economy.

In Adam Ferguson’s words, these are the result of human action but not of human design. Hayek’s argument is that because events in these orders have been shaped by the individuals’ choices within them, what may appear to an outside observer to be an inefficiency or failing may have a hidden logic to it.

Central planners or rule-makers often lack the information they would need to make good regulations, and in situations where people’s tastes or innovations may change over time, they may not ever be able to make regulations that achieve their own goals.

This argument has been added to by more recent work that has emphasised the value of feedback loops in learning (which markets have, but regulators usually don’t), and the dangers of imposing the same error across an entire system. If we think that the future is basically unknowable in a complex world, and so most plans are wrong, but that we can learn from our mistakes and successes, then we should want as many different experiments as possible, with as many different mistakes to learn from.

In practical terms, that means that we should have a predisposition against regulation, even regulation that appears to solve problems, if it holds people back from experiments. There are also serious examples of regulations leading to bad things that are even worse because everyone has been forced to make the same mistake, which strengthens this predisposition even more. The more complex a system is is, the more we should value pluralism.

All of this has to do with having limited knowledge in a complex world, not incentives, though of course there may be good incentives-based arguments to be made on a case-by-case basis against certain regulations.

But this doesn’t tell us very much about the distribution of wealth in a society. To use Bergh’s terminology, redistribution may be something that can be done with relatively low amounts of knowledge. That doesn’t mean that it can’t fail – clearly it can, very easily, if the level of redistribution is set too high (or too low) – or that the system itself be badly designed.

The particular distribution of wealth in an economy may be an efficient reflection of who is most productive, and interventions that try to correct for that are likely to fail for the same reasons that other interventions designed at improving market efficiency will fail.

But we may have non-economic concerns about the distribution of wealth as well. An economy in which everyone is paid according to their productivity may be very brutal for people who are not very productive and cannot change that. We may wish to redistribute income for their welfare.

We might also want to redistribute money to encourage the sort of experimentation that drives innovation, above. Or, as Ben has argued, to make the market focus more on satisfying the wants of unproductive (ie, poor) people than it currently does.

A good argument against this would be that we don’t need the state to redistribute – that, left alone, private charity will be enough. There is some evidence for this position but not enough, yet. Maybe some day there will be and I will change my mind.

Until then, I am with Bergh. A ‘Hayekian welfare state’ would do almost no regulation of the economy, but redistribute quite a bit of money for welfare reasons. This looks not just possible, but very desirable.

Some people blame sex slavery, or trafficking, driven by pimps for keeping young girls in prostitution. Young girls are drawn in and brutalised by pimps, the conventional wisdom goes, and tackling this is the best way to reduce the number of girls trapped in prostitution. The Modern Slavery Bill in the UK is motivated by this kind of assumption.

A new study of underaged sex workers in New York City and Atlantic City seems to suggest that this is actually very rare. Using the largest data set ever gathered in this kind of work in the US, researchers surveyed pimps and sex workers to find out how common pimping was. Figures 1 and 2 below show how few underaged girls are introduced to sex work by pimps and how few actually have pimps on an ongoing basis:

In fact, poverty and lack of access to work, housing or education seem to be what keep girls in prostitution:

None of this tells us that anti-slavery legislation is bad, but it does seem to miss the point somewhat. However, one fact cited by the authors does mean we should think twice about anti-slavery laws: only 2 percent of underaged sex workers said that they would go to a ‘service organisation’ if they were in trouble, because ‘the anti-trafficking discourses and practices they would encounter in these organizations threaten to criminalize their adult support networks, imprison friends and loved ones, prevent them from earning a living, and return them to the dependencies of childhood.’

If only a small number of sex workers count as being trafficked, and anti-trafficking laws alienate others from the services set up to protect them, then anti-slavery legislation may end up having very perverse consequences indeed.

This year’s Global Go-To Think Tank Rankings, which are compiled annually by the University of Pennsylvania, have been released, and the ASI did pretty well. Our global rankings were:

69th in Top Think Tanks Worldwide (Non-US)

16th in think tanks in Western Europe

3rd in Top Domestic Economic Policy Think Tanks

5th in Top International Economic Policy Think Tanks

17th in the Best Use of Social Networks

40th in Think Tanks with the Best External Relations

24th in Think Tanks with the Most Significant Impact on Public Policy

12th in Think Tanks with Outstanding Policy Orientated Public Programmes

The full rankings are here, and congratulations to our friends at other think tanks who also did well, particularly the Cato Institute which came 8th in the total US think tank rankings. We rose in most rankings, and by our own internal measures of impact, media coverage, research quality, events attendance and fundraising, 2014/15 is shaping up to be a very good year indeed.

Reading the report reminded me of the challenge that think tanks (and non-profits in general) all have. As Jeffrey Friedman has observed, when you run a for-profit firm, you have a single measure of success – profit. If you do X and profits go up, keep doing X. If you do X and profits go down, stop doing X. In a complex world having just one thing that matters cuts through quite a lot of confusion.

But, obviously, non-profits don’t have that measure or any single thing we can focus on. For us, it’s a constant struggle. Focus on fundraising too much as a think tank and you end up being good at talking to donors but not good at using their money to make the world better. The tail wags the dog. Focus on media coverage and you become a rent-a-quote. And so on.

The thing you really care about is changing the world. But if that’s done by, say, changing the minds of young people, it takes decades to measure success. If it’s done by focusing on policies implemented, you’re tempted to go for the easy, insignificant win over the difficult long-term change. There’s no single thing you can look at, so it’s tough to cut through the complexity. Rankings like this don’t do that entirely, but every little helps.

Everyone got richer in real terms, although some a lot more than others – and this doesn’t fully include technological developments that make pocket supercomputers cheap enough that even people on quite low incomes (for rich countries) can afford them. Like Scott I am more interested in the bottom 80 percent than the top 20 percent, so this is broadly good news. The bottom 10 percent do seem to be left behind to some extent, but African poverty has still fallen by 38% during this period, and most health-related metrics have improved. Maybe issuing more unskilled work visas to poor Africans and Indians would help to boost the incomes of the bottom 10 percent even more.

In another post, Krugman points out that the left’s “econoheroes” tend to be of a pretty good academic calibre (he cites himself and Joe Stiglitz, both Nobel Prize winners), whereas the most popular economists on the right tend to be slightly less impressive supply-siders. I think that’s fair, and it’s a pity. When’s the last time you heard a right-wing pundit citing Nobel Prize winner (and not-so-secret free marketeer) Eugene Fama’s work on the efficiency of financial markets? Or, indeed, Milton Friedman’s monetary prescription for stagnant economies like Japan or, now, the Eurozone?

Well, we try to here at the Adam Smith Institute, and a very honourable mention goes to the excellent James Pethokoukis at the American Enterprise Institute. There are others, but in general I think Krugman’s point is pretty fair. For example, I often meet right-wingers who think using monetary policy to generate extra inflation during demand-side recessions is somehow a left-wing idea. This would come as a surprise to Milton Friedman!

I have a theory about why: the post-Cold War consensus has been so good for us – that is, the “Overton Window” of debate has shifted so far rightwards — that the best ideas have been absorbed by the ‘centre’ and the less compelling ones are all that’s left over. That seems unsatisfactory to me, but it does leave me wondering what it means to be a free marketeer, if not a strong preoccupation with the supply side. Maybe Hayek has an answer.